Why Are Funding Rate Payments Exchanged Directly between Traders and Not with the Exchange?

The funding rate is designed to be a market-neutral mechanism, purely incentivizing arbitrage between the perpetual contract and the spot market. By exchanging payments directly between long and short traders, the exchange avoids taking a directional risk or profit from the funding rate itself.

The exchange only facilitates the transfer, ensuring the mechanism remains a peer-to-peer adjustment to maintain price parity.